In Sunday’s Star-Ledger, correspondent Samantha Marcus reported that the state’s Pension and Health Benefit Reform Commission has entered phase 2 of its work—putting together the fine points of a proposal that would result in monumental changes to public employee pension and health benefits programs.
The commission now embodies three task forces that are working out details of pension reform, a health benefits overhaul, and a constitutional amendment and legislation to make it all possible. Clearly, the “Roadmap to Resolution,” the commission’s final report, is on the table and warrants our attention.
On April 2, NJSBA staff members from our labor relations and governmental relations units joined me in a conference call with two commission members—Thomas J. Healey, chairman, and Tom Byrne—and a member of its special counsel team, Kenneth J. Wilbur. While we learned of these latest developments during the conference call, our primary goal was to establish a line of communication with the commission, to outline the Association’s policies on pension and health benefit reform, and to learn more about the various elements of its proposal.
We made progress in all three areas.
NJSBA is keenly aware of the weight that the current pension system’s unfunded liability places on our state’s finances, the need to ensure the security of the pension system for future retirees, and the impact that health benefit costs have on government budgets and taxpayers. But as I noted in my March 9 Reflections column, a major concern is the plan’s proposal to shift the cost of a future pension system and post-retirement medical benefits from the state to local school districts.
Post-retirement medical benefits were granted to members of the Teachers’ Pension and Annuity Fund in the late 1980s by the state, not by local school districts. State payment of the employer’s share of teachers’ pension costs goes back 50 years or more. Perhaps, determining why the state agreed to fund teachers’ pensions would add to the current debate. However, the most critical issue is not why it did so back then, but what would happen to education programs, and local taxpayers, if school boards are required to take on these new costs today.
According to the Roadmap report, the shift would be cost-neutral for local governments, including school districts, when health benefit reforms for active and retired employees are implemented. However, the actual financial impact—specifically on local boards of education—will depend on the construction of these health benefit reforms, a work that is still in progress.
That’s why maintaining lines of communication with the commission is essential. The New Jersey School Boards Association has long-standing policy supporting continued state payment of TPAF costs. But we also have in-depth knowledge of how health benefit costs impact local school district budgets and collective bargaining, as well as strategies to address these issues. I believe that we can add much to the conversation. Apparently, so do the commission members who invited us to share further information and data, as well as our concerns and questions. We are in the process of doing just that.
Accurate, verified data is essential to all decision-making. That’s why we have also joined with the New Jersey State League of Municipalities in a study of the potential local property-tax impact, if any, of shifting teachers’ pension costs to local school districts. NJSBA wants to inform the discussion; we want to ensure that, in the end, a pension reform plan does not weaken education programs and services. Anything else will harm the future of our state.
These are my Reflections. I look forward to hearing yours. Contact me at [email protected].
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